Addressing threats to health care's core values, especially those stemming from concentration and abuse of power. Advocating for accountability, integrity, transparency, honesty and ethics in leadership and governance of health care.

Friday, June 19, 2009

Managed Care Executives Will Not Limit Rescissions

We have posted before about how certain health care insurance companies/ managed care organizations in California were found to have cancelled individual health insurance policies after the people holding them made substantial claims, supposedly rationalized by minor errors or omissions in the information the people supplied to the companies on their individual applications found after the claims were made. Several companies were subsequently disciplined by the state government for these "rescissions." See posts on rescissions by WellPoint here, here, and here, and by Health Net here.

Executives of several such companies testified before a US congressional committee recently, with remarkable results, as reported by Lisa Girion writing in the Los Angeles Times. First, by way of background, the article suggested that rescissions are widespread:

An investigation by the House Subcommittee on Oversight and Investigations showed that health insurers WellPoint Inc., UnitedHealth Group and Assurant Inc. canceled the coverage of more than 20,000 people, allowing the companies to avoid paying more than $300 million in medical claims over a five-year period.

Furthermore,

The committee's investigation found that WellPoint's Blue Cross targeted individuals with more than 1,400 conditions, including breast cancer, lymphoma, pregnancy and high blood pressure. And the committee obtained documents that showed Blue Cross supervisors praised employees in performance reviews for rescinding policies.

One employee, for instance, received a perfect 5 for 'exceptional performance' on an evaluation that noted the employee's role in dropping thousands of policyholders and avoiding nearly $10 million worth of medical care.

Nonetheless, the executives were not prepared to abandon rescissions:

Executives of three of the nation's largest health insurers told federal lawmakers in Washington on Tuesday that they would continue canceling medical coverage for some sick policyholders, despite withering criticism from Republican and Democratic members of Congress who decried the practice as unfair and abusive.

The executives -- Richard A. Collins, chief executive of UnitedHealth's Golden Rule Insurance Co.; Don Hamm, chief executive of Assurant Health and Brian Sassi, president of consumer business for WellPoint Inc., parent of Blue Cross of California -- were courteous and matter-of-fact in their testimony.

But they would not commit to limiting rescissions to only policyholders who intentionally lie or commit fraud to obtain coverage, a refusal that met with dismay from legislators on both sides of the political aisle.

Sassi said rescissions are necessary to prevent people who lie about preexisting conditions from obtaining coverage and driving up costs for others.

'I want to emphasize that rescission is about stopping fraud and material misrepresentations that contribute to spiraling healthcare costs,' Sassi told the committee.

But rescission victims testified that their policies were canceled for inadvertent omissions or honest mistakes about medical history on their applications. Rescission, they said, was about improving corporate profits rather than rooting out fraud.

Also,

Late in the hearing, Stupak, the committee chairman, put the executives on the spot. Stupak asked each of them whether he would at least commit his company to immediately stop rescissions except where they could show 'intentional fraud.'

The answer from all three executives:

'No.'

This is just amazing. Here are executives of three of the country's largest for-profit health care insurance companies/ managed care organizations asserting they will continue cancelling peoples' policies after they make claims, simply because of minor errors or omissions in the application documents that have no bearing on the particular claims, or on discrepancies between information provided by patients and doctors, given that patients may not have full access to or understanding of what is in their charts. What good is an insurance policy that is liable to be cancelled as soon as one makes a claim on it?

Whatever these companies are selling, it is not insurance. Basing our health care system on their products is foolish, but that is what we are doing, and what many political leaders would continue to do.

In my humble opinion, if we are going to have a system based on privately provided insurance, that insurance has to be honest, unlike what some of our largest insurance companies seem to be peddling.

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